CHALICE MINING LIMITED — Capital/Financing Update 2009

Sep 30, 2009

ASX ANNOUNCE M ENT

==> picture [161 x 84] intentionally omitted <==

Strong results move Chalice closer to production at Zara Project

==> picture [591 x 52] intentionally omitted <==

Chalice Gold Mines limited ABN 4 7 116 648 956

1 October 2009

Highlights

• Significant progress made in t he scoping study at the Koka Gold Deposit within the Zara Proje c t in Eritrea.

• Initial metallurgical test w o rk confirms previous indications that overall gold recoveries will e x ceed 95%.

==> picture [150 x 113] intentionally omitted <==

• Over 60% of gold recoverabl e from gravity circuit. This suggests Koka can be treated using a prove n , conventional process.

• Water drilling indicates stron g flows of good quality process water.

• Final feasibility study on trac k for mid-2010.

Scoping Study Update

INVESTMENT OPPORTUNITY

Chalice is pleased to report that it ha s made more substantial progress in its plan to develop the Zara Project in Eritrea following its merger with SubSahara. Among the recent key achi e vements have been highly favourable results from both metallurgical testwo r k and water drilling.

High grade gold deposit

Scoping study near completion Feasibility study by Mid-2010

Metallurgical Testwork

Metallurgical testwork being undertaken at the AMMTEC Perth laboratory on representative composite samples fro m seven specifically drilled diamond core holes representative of the Koka deposit is confirming the favourable metallurgical characteristics of the project.

Medium term production potential

Regional ground position virtually untouched by modern exploration

Metallurgical recovery results on the m aster composite prepared from 104 intervals selected as representative of t he orebody is excellent with around 60% of gold recovered by gravity and o v erall recoveries of 95 to 97% for grind sizes of 80% passing 150 to 75 micron r espectively. Reagent consumptions are low at less than 0.5 kg/t for both lime a nd cyanide.

Further variability testwork and optimi s ation work is in progress to complete all technical data required for the feasibili t y study.

www.chalicegold.com

9322 5800 E: info@chalicegold.com

Chalice Gold Mines Limited, Level 2, 1292 Hay Street, West Perth, Western Australia T: +618 9322 3960 F: +61 8

ASX ANNOUNCE M ENT Strong results move Chalice closer to production at Zara Project

==> picture [591 x 52] intentionally omitted <==

Chalice Gold Mines limited ABN 4 7 116 648 956

1 October 2009

Physical properties testing c ompleted on 10 composites of drill core rep r esentative of the mineralisation of the Koka deposit indicate the ore to be of mediu m competency as determined by the SMC test p rocedure, moderately competent as determined by conventional Bond Work Index (15-18kWhrs/t) and with a normal abrasion index of 0.3.

This simple metallurgy will enable the implementation of a well proven processing route employing crushing and gri n ding by a conventional ball mill followed b y gravity and CIL recovery.

Water Drilling

Test drilling for water has co n firmed the presence of significant water contai n ed within alluvial gravels of the nearby Zara Ri v er some 7km from Koka. The Zara River has a c a tchment of some 970sqkm and is the main d r ainage system for the region. Production bor e s are now being established ready for detailed pump testing to establish sustainable yields f o r bores and thus the number of production b o res required. Early indications are that requir e d water volumes should be met from 4-5 bore s . Importantly, the water quality is good with lo w TDS values.

Overall Study Progress

The Scoping Study involving consultants Lycopodium Minerals, AMC a n d Knight Piesold remains on schedule for co m pletion in late October and will be present e d to the Eritrean Government and released t o the Australian Stock Exchange in early Nov e mber as the first phase of our ongoing commitment to progressing the project to final feasib i lity stage by mid2010.

==> picture [109 x 44] intentionally omitted <==

Dr Doug Jones Managing Director & CEO 1 October 2009

Chalice Gold Mines Limited, Level 2, 1292 Hay Street, West Perth, Western Australia T: +618 9322 3960 F: +61 8 9322 5800 E: info@chalicegold.com